When Businesses Owe the IRS

The IRS urges businesses to file all tax returns that are due, regardless of whether you can pay in full. Indeed, you have options if you're having problems raising the cash.

File all tax returns due, even if you can't pay in full. File them the same way and to the same location that you file on-time returns. If you've received a notice, send your past due return to the location indicated on the notice.

This is advice straight from the IRS. You may be eligible for a long-term payment plan — your specific tax situation will determine what options are available - an installment plan, if you will, that allows you to pay in more than 120 days is one of the available options.

How do you get in on this? You've filed all required returns and realize you owe $25,000 or less in combined tax, penalties and interest. Apply online because setup fees are higher if you apply by phone or mail or in person.

What do you need to apply? The basics - log in with the user ID and password that you receive when you register for an online payment agreement. You'll need:

• Your Employer Identification Number.
• The date your business was established.
• The address you used on your most recently filed tax return.
• Your caller ID from the notice, if you received one.
• Possibly your balance due amount, the tax form filed or examined, and the relevant tax period.

How much is this going to cost you? If the IRS approves your payment plan, you'll have a fee added to your tax bill. And you should know that if you owe a balance over $10,000, you must pay by direct debit.

If you've chosen a long-term payment plan, you'll be slapped with a $31 setup fee, plus accrued penalties and interest until the balance is paid in full. This works with direct debit. If you don't want direct debit, you'll have to pay a $149 setup fee and accrued penalties and interest until the balance is fully paid. Suppose you want to revise an existing payment plan or reinstate a default - the fee is only $10.

To view the details of your current payment plan and log in to the online payment agreement tool, use the Apply/Revise button and make the following changes:

• Change your monthly payment amount.
• Change your monthly payment due date.
• Convert an existing agreement to a direct debit agreement.
• Reinstate after default.

If your new monthly payment amount doesn't meet the requirements, you'll be prompted to revise the payment amount. If you're unable to make the minimum required, you'll receive directions for completing Form 433-F, Collection Information Statement, as a PDF and how to submit it.

If your plan has lapsed through default and is being reinstated, you may incur a reinstatement fee.